Note: This article was written by the staff of consumersadvocate.org. The views expressed here are entirely their own and does not necessarily reflect those of GET REALty. GET REALty does not get any payment for posting this post and does it for informational reasons only.
Picture this! You bought a new home and are really excited about moving in before Summer starts. You decide to bring some of your boxes before the big move. The house feels super warm. You’re getting hot and reach for the AC remote. When you turn it on, it doesn’t do anything. Not a blip, a sound or a gust of cool air. Nothing. You remember when your Realtor tried to talk you into buying a home warranty. You think, “I should’ve gotten that policy.” But how could you know what it was, or if you even needed it?
If buying a home seems like a hard decision in life, purchasing a home warranty could prove harder. Here are some frequent questions to consider when buying a home warranty.
What are home warranties?
Buyers usually confuse home warranties with homeowner’s insurance, but they are completely different things. A home warranty is actually an added service you purchase that protects you, as a homeowner, against unexpected repairs and expenses that result from system failures or appliance breakdowns that are not included in your insurance policy.
It’s important that buyers read the fine print before actually buying a home warranty, since many times, certain appliances and systems are not covered. They want to make sure all their needs are covered before making a purchasing decision.
How does a home warranty work?
Even though a home warranty and a homeowner’s insurance are two different things, they operate similarly. As a homeowner, you pay a fixed premium each year to ensure certain appliances and home systems are covered under your policy. If for example, an appliance breaks down in your home, you file a claim with your company.
After a buyer submits his or her claim, the home warranty company schedules an appointment through a local service technician to determine whether the broken appliance or system needs to be repaired or replaced. However, it is the buyer’s responsibility to cover the fee for that appointment.
What exactly is covered under a home warranty?
Home warranty coverage varies depending on each company and location. Nonetheless, the standard appliances and systems covered by a basic policy usually include: AC units, garbage disposals, ovens, refrigerators, dishwashers, and plumbing features.
Buyers should get at least 3 quotes from different companies using their exact physical address for the most accurate estimate. Likewise, if there’s a particular appliance or item not covered by the basic home warranty, buyers can inquire about availability of such coverage for an
What’s the average cost of a home warranty?
Usually, a policy can range between $300 and $600 per year. Additional home service fees vary depending on each company, service provider and broken appliance or system, and can range between $75 and $125.
This cost doesn’t include special items that buyers want to add to their policy. These can spike up prices up to $1,200 annually.
Selling a home warranty policy can prove difficult if buyers can’t find value in it. To close a sale with a home warranty, Realtors should detail the benefit of such policies to buyers and help them understand the short and long term benefits of owning a home warranty.
What are the 3 most important things to keep in mind when looking for the best home warranties out there?
Explore multiple companies that service your area
Know what appliances and home systems you want to insure
Read the fine print!